Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets, CFDs, OTC options or any of our other products work and whether you can afford to take the high risk of losing your money.
Published on: 02/11/2021 | Modified on: 16/09/2022
Spread betting is a leveraged product, which means you only have to place a percentage of the full trade value to open a position. For example, if you placed a spread bet on a share you would need to deposit 20% of the full trade value as the margin requirement. View our spread betting margin rates for popular markets.
When trading with a margin account, the margin you will be required to deposit reflects a percentage of the full value of the position you wish to open. We refer to this as 'position margin' on our platform. The position margin will be calculated using the applicable margin rates, as shown in the product library area on the platform.
For shares, different margin rates may apply depending on the size of your position or the tier of your position (or a portion of your position) in that instrument. The portion of the position that falls within each tier is subject to the margin rate applicable to that tier.
In order to calculate the position margin, the level 1 mid-price (shown on our trading platform) is used.
Here is an example using Company ABC (GBP) margin rates.
| Tier | Position size (stake) | Margin rate |
|---|---|---|
| 1 | 0-10 | 20% |
| 2 | >10-30 | 25% |
| 3 | >30-50 | 30% |
| 4 | >50-100 | 35% |
| 5 | >100 | 50% |
The sum of:
Stake in Tier 1 x Tier 1 Margin rate
Stake in Tier 2 x Tier 2 Margin rate
Stake in Tier 3 x Tier 3 Margin rate
Stake in Tier 4 x Tier 4 Margin rate
Stake in Tier 5 x Tier 5 Margin rate
x level 1 mid-price x point multiplier
Based on the margin rates in the table below for Company ABC (GBP), a position of £65 per point, using the level 1 mid-price of 275.0 (£2.75), would require a position margin of £5,018.75.
Your position margin requirement is calculated as follows:
| Tier | Position size | Margin rate | Margin |
|---|---|---|---|
| 1 | 10 | 20% | 10 x 275 x 20% = £550 |
| 2 | 20 | 25% | 20 x 275 x 25% = £1,375 |
| 3 | 20 | 30% | 20 x 275 x 30% = £1,650 |
| 4 | 15 | 35% | 15 x 275 x 35% = £1,443.75 |
| 5 | 0 | 50% | 0 |
| Total | 65 | Total = £5,018.75 |
The notional value of your total position is: £17,875.00 (65 x 275).
Spread betting using margin allows you to open a position by only depositing a percentage of the full value of the position. This means that your losses will be amplified and you could lose all of your capital. Profits and losses are relative to the full value of your position. Learn more about our trading fees.
Spread betting using margin is not necessarily for everyone and you should ensure you understand the risks involved and if necessary seek independent professional advice before placing any spread bets.
See our spread betting guides to further your learning and consult our trading costs page. Compare our award-winning Next Generation platform features to MetaTrader 4 and choose the best trading platform to tailor for your individual trading needs: Next Generation vs MetaTrader 4.
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FAQs
Spread betting position margin is calculated margin rates, which vary depending on the asset class (forex, indices, commodities) and specific instrument you trade on. Spread betting margin also depends on the size of the position that you wish to open. Learn more about our spread betting margins.
Our margin rates for financial assets are the same for both products, whether you’re spread betting or trading CFDs. These start relatively low at 3.3% for major forex pairs, and are higher for more volatile assets, such as shares, which have a margin rate of 20%. Check our spread betting margin rates.
You can deposit as much or as little capital as you want into your spread betting account, once you’ve opened an account with us. Leveraged trading means you only need to pay an initial deposit to open a trade, based on the instrument’s margin requirement. However, you need to have sufficient funds in your account to cover your margined trades and prevent account close-outs. Read more about the risks of spread betting.
Trading on margin when spread betting is an effective way for traders to gain greater exposure to the financial markets, including forex, shares and commodities. This requires traders to place a fraction of the full trade value as a deposit, which is known as the margin requirement. However, profits and losses will be based on the full value of your position. Open a spread betting demo account to practise trading on margin.
A spread refers to the difference between the buy and sell prices of an instrument in trading. The bid-ask spread is affected by a number of factors, including market volatility and liquidity. Discover our spread betting spreads.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
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